3) The Act is preempted by federal statutes and foreign trade agreements between the United States and Canada.

4) The Act is void for vagueness.

The Commerce Clause Challenge

Plaintiffs contend that the effect of the Act is to regulate the importing or sale in Pennsylvania of steel made outside the United States. Plaintiffs submit that the regulation of commerce with foreign nations is a subject that is within the exclusive control of the federal government under the commerce clause of the United States Constitution. Citation of authority is not required to affirm this basic principle, and if the Act does, in fact, regulate commerce with foreign countries it is invalid. A state law may violate the commerce clause if its purpose or effect is to discriminate against foreign competition. Examples of such illegal laws are Bacchus Imports Ltd. v. Dias, 468 U.S. 263, 82 L. Ed. 2d 200, 104 S. Ct. 3049 (1984), where the state of Hawaii imposed a tax on the sale of liquor at wholesale but exempted certain locally produced beverages, and Hunt v. Washington Apple Adv. Comm., 432 U.S. 333, 53 L. Ed. 2d 383, 97 S. Ct. 2434 (1977), where a North Carolina statute attempted to limit the "grading" information that could be used on closed containers of apples shipped to North Carolina. In both instances the state laws discriminated against foreign products in favor of locally produced goods.

In opposing plaintiffs' motion for summary judgment, and in support of its cross motion, the defendants dispute that the Steel Products Procurement Act regulates commerce or otherwise intrudes in areas reserved to the federal government. The defendants contend that public agencies of the Commonwealth are "market participants", and that the Act does no more than limit the products that may be purchased or used in constructing public projects. Rather than "regulating" or attempting to regulate the sale in Pennsylvania of foreign made steel, the state contends it is legitimately supporting an important local and national industry by restricting steel purchases of public agencies to domestically produced steel.

The rationale for the "market participant" exception is illustrated in Hughes v. Alexandria Scrap Corporation, 426 U.S. 794, 49 L. Ed. 2d 220, 96 S. Ct. 2488 (1976). Maryland enacted a complex statute aimed at reducing the volume of inoperable or junk vehicles in Maryland by offering an incentive to scrap processors. The law provided, among other things, for the payment of a "bounty" to scrap processors who destroyed and processed junk vehicles formerly titled in Maryland. Processors located in Maryland were provided an easy means of proving the origin of such vehicles, while non-Maryland scrap processors were held to a more demanding measure of proof in order to claim the bounty. Plaintiff, a Virginia scrap processor, challenged the statute as violative of the commerce clause. The Maryland District Court agreed, finding that the law imposed "substantial burdens upon the free flow of interstate commerce" and discouraged wreckers from taking vehicles out of Maryland for processing. The Supreme Court, however, reversed and held that the commerce clause does not require independent justification when a state enters the market as a purchaser:

Nothing in the purposes animating the Commerce Clause forbids a State, in the absence of congressional action, from participation in the market and exercising the right to favor its own citizens over others.

The Supreme Court acknowledged that the effect of the statute may tend to keep junk vehicles from flowing to out of state processors, but noted that "no trade barrier of the type forbidden by the Commerce Clause . . . impedes their movement out of state." (426 U.S. at 810, 96 S. Ct. at 2498, 49 L. Ed. 2d at 231).

Plaintiffs also argue that legislation such as the Act is preempted by various federal agreements or legislation, including the United States -- Canada Free Trade Agreement. However, we doubt that Congress intended the trade agreement to preempt states from being "market participants," and there is no clear intent of Congress to forbid states from taking action to limit the source of their purchases of commodities. In Kentucky West Virginia Gas v. P.U.C., 837 F.2d 600 (3d Cir. 1988) the court outlined the three tests for determining if preemption has occurred:

Thus, economic regulation is subject to a less strict vagueness test because its subject matter is often more narrow, and because businesses, which face economic demands to plan behavior carefully, can be expected to consult relevant legislation in advance of action. Indeed, the regulated enterprise may have the ability to clarify the meaning of the regulation by its own inquiry, or by resort to an administrative process. The Court has also expressed greater tolerance of enactments with civil rather than criminal penalties because the consequences of imprecision are qualitatively less severe.

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